How Brian Raymond Raised $65 Million in Funding for Unstructured IO (Brian Raymond / Unstructured IO)

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They're like, not a problem. how about we do a much bigger round? How about, how about we do, a 5 million dollar round It was no longer a pre-seed It was like a seed slash pre seed. We, we went from 0 to 5 In the bank off of a slide deck, right? And some great references.

Jason Yeh (2): ​

A lot of entrepreneurs take risks when they're young and have nothing to lose. But that's not everyone's story. In some case maybe they found their dream job started a family, bought a house. And then something happens that completely throws them off course. Today's guest was one of those people. After an unexpected situation, he decided to take a chance And start a company to tackle an opportunity he saw at his previous job in AI.

Today, I'm speaking to [00:01:00] Brian, Raymond founder, and CEO of unstructured IO. A company that's connecting enterprise data to LLMs. And I have to say his story is wild. In two years, Brian has raised $65 million in venture capital across three rounds. The most recent of those being a $40 million series B. Led by Menlo ventures. Brian's journey into entrepreneurship was unique, but also one, I think a lot of you will be able to relate to. But before we get into the details, you might be interested to hear what Brian originally set out to do as a kid.

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Brian Raymond: growing up, I was not, um, I was not terribly studious. I was like, I was a B student, right? Um, I had, yeah, I was like, look, I'm good. I'm good, right? Um, I had my heart set on becoming a professional motocross racer all the way through like junior high and high school and [00:02:00] into college.

I worked at motorcycle shops. For seven years, dirt bike shops, motorcycle shops, all the way, you know, from so I was uh, I was making sandwiches at Togo's at 15, turned 16, got a job, got a job at a dirt bike shop all the way through college. and look, I like, I had no idea what I wanted to do, but I, um, like, I mean, I like, like motorcycles a lot.

I ended up breaking my back racing motocross, like first year college. And I was like, okay, well, this is never going to happen.

It was a really bad injury, and I was like, alright, I gotta get my shit together, I don't know what I'm gonna do. And I ended up falling in love, at the time, with like political science and like international affairs.

And this is like after 9 11, and this is, you know, and I was like, okay, this is This is a meaningful and impactful. I had a few professors that really kind of believed in me. I transferred from junior college to, um, to UC Davis and had some great relationships and I was like, maybe I'll just, you know, and like, I was like playing catch up, you know, academically, right?

Um, I was just like [00:03:00] kind of

redefining who I am.

Jason Yeh (2): Yeah. Yeah. So crazy. I mean, I, I just did not expect that looking at your LinkedIn background and some of the fancy logos that you have on your, in, in your, your history, your work history. Uh, and, and before we rush into that, I'm kind of like much more interested in you personality wise as, as a younger person, uh, and you know, what your, what your inspirations were, who your role models were.

So as you're, uh, Thinking about, I'm going to be a professional motocross racer. what were your parents or what were your parents thoughts around that? Were they like battling you the whole way? Were they like trying to get you to study or did they have, you know, traditional backgrounds or traditional careers that they were trying to push you into?

I'm just curious,

you know, you didn't know what you wanted to do, but what were the inspirations? What were the role models like?

Brian Raymond: Look, my, um, My mom was an elementary school teacher. My dad was a mechanic. Um, and I grew up, it was a family thing. I grew up, my [00:04:00] uncle raced, my, my grand, I went motorcycle riding with my grandfathers. Um, it was, uh, my mom rode, it was a family thing. And, um, and so for that, like I had like different racers and things like that, that I was, you know, uh, I'd always, and like, my parents were, were, were pretty, like, they were like, Hey, we're going to fight our fights at the right time.

And they're like, as long as you're making forward progress and doing fine, We're just glad that you got like your passion about something. You want to be world class at something. And I think that's, that's what I've kind of taken back is like, um, if you're going to do something like do it a hundred percent, right.

And you learn a lot from that. That's transferable and lots of other areas of life, right. If you can do it, if you can do it in some area. And so, um, they were incredibly supportive, like, the entire time, um, as long as I wasn't, like, it was income at the cost of, of academics.

Jason Yeh (2): Wow. I love that. I love that little thing that you pulled out about, you know, um, Just being world class, you know, just trying to be as good as you can at [00:05:00] whatever discipline you're in. And you're right. Um, I think we tend to end up talking to founders who, were sort of pushed in that direction, either by themselves or their parents about being world class and maybe academics or, or something else. But you're right. Like, Learning how to do something well, learning how to like, um, win, you know, win within a system, whether it's competition or academics, like that, that makes a lot of sense.

Um, but at some point you said you were, you were playing catch up, I guess academically, but also kind of like, if this isn't going to be my career, what is going to be my career? Um, I don't want to spend too much time on this because I'm sure given all the stuff that you're doing, you have a lot of opportunities to tell, to talk about the, like the genesis of unstructured, but it would be very interesting and important for us to understand, like, how did you get to a point where you felt like you were going to start a company? And then right after you tell me that answer, I'll quickly kind of pivot this [00:06:00] conversation into, you know, the topic that we love talking about, which is, which is fundraising. So tell me a little bit about that transition.

Brian Raymond: I, it was, like, the summer of, like, 2021, and I was at Primer AI, um, leading global public sector there, which was, like, a, you know, a big chunk of the company, um, more than, like, half of the, like, almost 80, 80 percent of the top line. And, um, we had a big problem. We were, like, in professional service as hell.

Like, there, we were an NLP company. We were, you know, fine tuning models, building applications on them, really an early kind of like top tier language model company, along with Hugging Face and OpenAI and others. And, um, and we just kept getting sucked into these projects. And, um, and a lot of it had to do with taking company data and, you know, PDFs, PowerPoints, PNGs, whatever, and transforming it into something that you can feed into a Machine learning model.

And it was a heck of a lot of work doing that manually. And we went to all these other companies in the space and they're like, can you guys help us? [00:07:00] Right. And they're like, we'll move it from one place to other. We're going to help you transform it. Like that's a nightmare. Um, and there's nothing built for that right now.

So good luck. and so we ended up having to do ourselves. I was like, geez, this is a problem in need of a solution. Like somebody should start a company around this. And. You know, nine months later, the company's going through a lot of, a lot of challenges, right? And, um, and they lay off like a huge portion of the company.

I'm, wrapped up in that. I, you know, have three kids, I'm immediately started interviewing for their jobs, but my my wife's like, look, you've had this idea. Like, if you don't make a bet on yourself right now, you're never going to do it. And so I was like, okay, well, let me just paralle path. it I'll, I'll interview, but then also go for YC.

I'll talk to investors. I'll, I'll kind of fine tune A pitch deck and then we'll just, we'll see how it goes. but it was really like that lived experience in the job that I was in previously, where I had no designs on doing it, but I was kind of pushed out of the nest, so to speak that, um, that kind of unshackled me to go and, [00:08:00] and pursue it really vigorously.

Jason Yeh (2): Wow. Uh, and, and by the way, I think I might reference this later. Like we yada, yada, yada over motocross racer

Brian Raymond: Yeah.

Jason Yeh (2): EIA agent, which by the way is amazing. And then, and then, you know, getting into this space, we'll come back to that later at maybe.

Um, but I, this came, you know, I had sort of this question that I was going to ask you, which was a little bit around, did you know this was going to be a venture backed business from the beginning?

And it sounds like you did probably. Combination of, you know, the responsibilities you have at home and other things. Um, but this kind of brought up a question in my mind that I think is like, you know, I'll be curious if you can, you know, how you would answer this. But looking back, do you think if you hadn't been let go, you would have ever started a company, you would have started this company?

Brian Raymond: I don't think so. Like I just, I loved, I love that company that I was with and I love the [00:09:00] people I've worked with and like the mission and everything that I loved it. And so it was really this like. Exogenous shock, right? Um, that created like this, the space, maybe potentially, maybe I would have decided at some point, but it's scary thing to do,

right?

Like just to decide to do it. It's, and I don't want to trivialize the decision for folks that are earlier in their careers that maybe, but like, for me, like we have a mortgage, I have three kids under the age of six, right? My wife stays home. Um, and so for me, like it would like, like, The notion of like quitting a job that I love and I'm making good money at to go do something like this, like it wouldn't have felt responsible.

Right. Um, given the competing priorities in life, but like given the circumstances, it was like, okay, like let's take a run at this thing and see if we can make it work, you know,

Jason Yeh (2): That's awesome, Brian. I am, I'm glad you were, you decided to be, you know, transparent and honest because I think that part of the story. As it pertains to starting companies, but [00:10:00] also fundraising, it was good to hear because I think there, there can be a lot of revisionist history about like, you know, stitching together the timeline and then being like, and I had this idea and I had, I had to go, they let me off, but I went, you know, um,

and

Brian Raymond: it's a lot uglier than, and messier, the reality is always uglier and messier. And, and so, yeah, I don't, no sense in sugarcoating that because. Folks who are listening to this probably are living that themselves right now in some way, shape, or form.

Jason Yeh (2): I think that's right. And I just like, People understanding that that's like, that is a path forward too. That is something that might lead you to starting a company, starting a venture backed company. yeah, the, uh, not related, but similar. It's like, I'm running a company right now that I love too. And I can tell a very like revisionist history story that, Stitches it all together, but like there are these like forcing function moments and like you, you know, you described an exogenous force that's like gun to your head.

What are you going to do? How are you going to do this next [00:11:00] thing? Um, so that's, that's great to hear. Um, so a lot of interesting announcements around unstructured in terms of Big fundraising rounds. Uh, I do want to talk about that, but in the beginning, you know, there's another, there's your initial fundraise and wondered how you thought about that.

So you briefly mentioned you're considering YC, considering talking to other people. Did you, did you have a good handle on how to raise capital? Um, and you know, what was your mindset like when you're like, well, I'll pull this together. You're not going to start it unless you can raise money, or were you kind of like you had a plan on how to stitch some things together in the beginning?

Brian Raymond: So here's like, here's, here's how things went. So, I left Primer in March and I gave myself 90 days. and I had some savings. I said I'd give myself 90 days. Enrolled us in like the benefit, California, you know, like healthcare plan benefits. And, um, I was like, okay, I'm going to give myself to the end of June.[00:12:00]

And see if I can make this thing, make some, make a, make a play here. Otherwise I'm taking any job I can get right to get some, get some income. And so, um, I did not, I'm like a pretty like conservative guy from like, um, a risk standpoint. So I was like, what I'm going to do is I'm going to spend 12 hours a day as a, this as a job, and I'm going to parallel path it.

And so I'm going to plan on most paths, not working out. I'm not going to have one path. I'm going to parallel path this. So I was like, okay. I'm going to hustle. I'm going to get a YC application and I had a week to get a YC application in. I'm going to do that. I'm going to source technical co founders with me to help do that.

Burn through three of them that, that bolted at different points in the time and didn't stick with it. Um, and you know, and, and, and so that was like, um, I said, let's do, let's, let me see if I can get like a small precede together, 250K, 100K, 250K, maybe 500K, right? If I don't, I'm planning on not getting [00:13:00] into YC.

So can I do some, can I. Right. Um, and so those were like kind of the past, but I'm like a non technical founder, right? And so I'm not going to be sitting there like banging out code early on. And this was like, at least the thesis for the company, this is a deep tech. Play. This is not rip something quickly and get some market feedback.

This was like, work on it in the, in the quiet for a long time and then see, and then, and then bring it out in the open. And so that wasn't really an option to me to get some very early traction because it was just such a gnarly problem space. and so. You know, that, that March I was interviewing for jobs, but I'm set that aside, just talking about the fundraising side of things, what I did was I was like, okay, I need a slide deck.

And I had been involved sort of in primers series B and a lot in the series C. And so I had sort of an idea on what this stuff ought to look like. I'd been, you know, done some time in investment banking, you know, I was like, all right, I kind of get pitch decks. Right. Um, [00:14:00] and so I started at that, but I was like, okay, but the most important thing here is going to be the end users.

And so I made a list of, I made a challenge for myself to list a hundred. Engineers that I could get to, that I can get to and interview in a, like a Google sheet. And I just started like hounding them. For user interviews and say, is this a pain point? If so, how are you navigating it? What, what sort of solution would you want?

Right. And I had reams of notes from that as I'm beginning to engage with investors and figure out who I might be a good fit with and so on and so forth. And that was really kind of like April into May of 22. And then, you know, deck started coming together and getting feedback on deck. And then in June I had.

You know, a good chance of getting like probably like a 500k like pre seed round kind of party round pulled together a bunch of like 50 to a hundred K checks. Right. And then we also got into like into YC. And so I had an option to go to YC and we [00:15:00] had an option to do kind of a smaller party round. And then, um, like around like a, a pre seed, which is goodness.

Six months, a year, a runway, maybe, right? Um, and well, let me pause there. Anything on that, that you want me to unpack, but I can, I can kind of like roll from this into the seed and how the seed

came together.

Jason Yeh (2): Yeah, so maybe I'll just pause right there because I did have a comment that I wanted to make which was amazing also that you're like a non technical founder and needing to figure out how you convince, you know, we talk about fundraising, convince investors. But also how do you convince engineers and customers to join you?

Like, what can you do? And I, and I, I think it's really important to highlight and we'll, I'll couch this for the conversation with investors, but it really is applicable to everything is that non technical founders a lot of times are like, I have a great idea. I need to build something though. And I need to build it before we can actually even do anything.

I can't sell anything. I can't do anything. And it's just like, it's just [00:16:00] not the case at all. There is so much work that can be done around problem validation. Initial business development, et cetera. And that's the type of work that makes, that gives you, I mean, for lack of a better term, leverage when it comes to talking to engineers, like why is an amazing engineer going to join a non technical founder? In a deep tech field, well, like you have to have done some work and momentum that shows like why this is important. And then the same thing goes with investors. I think it's, it's important to know that investors are thinking like that. Well, it's like, can Brian even recruit more engineers? He's not an engineer.

Like what is he going to be able to do? So I think there's, there's reams and reams of of notes from all those interviews. That hustle is like exactly what it takes, um, to start out as a non technical founder without a technical co founder. So great, great lead up into this. It sounds like you had the decision. So [00:17:00] what did you end up deciding for that initial tranche? Was it YC or something else?

Brian Raymond: I decided neither actually. And

so, uh, I got like, Word had kind of gotten out in the VC community.

Jason Yeh (2): Hmm.

Brian Raymond: I ended up getting, um, a random email from, um, From a man who, like, I hold very dearly and who's my partner in crime, Enrique Salem at Bain Capital Ventures. I got a text message, never met the guy before. He's like, hey, can we talk tomorrow morning?

Jason Yeh (2): Whoa.

Brian Raymond: point, things were rolling to pull together like a pre-seed round. And I was like, I was at a movie theater with my wife. She's like, get off your phone. And I'm like, Holy shit. And, um, look, look, he just texted me

Jason Yeh (2): First of

all, how did you, before you keep going, how did Enrique get your phone number? Did you ever find that out?

Brian Raymond: Yeah, it was Tim Chin at Essence Venture and Tim up in Seattle, who I love. And, um, Tim's just an amazing, been an amazing partner and write small checks. Um, he's writing, starting to write bigger checks now. [00:18:00] Um, so I, I got connected through, you know, um, through Ben Van Roo, who's another founder of a company called Yurts.

ai and I love, Ben's like a brother to me. Ben had intro'd me to Tim. Tim had been kind of following the story, was interested in writing a small check. Tim, um, LPs are actually oftentimes larger VCs, so he knows everybody. And, um, and Enrique and then, um, Rat Guard from Bain, they had, um, they were like, okay, this is actually really interesting.

And, um, and so we got on the, on, I was like, okay, I'll chat, uh, pump the brakes on the pre seed. Cause that was like rolling at that point from like, uh, Paper standpoint, taught that Friday. They're like, look, will you give us the weekend to do some work? And I was like, of course. Um, they, um, they, they call me back Saturday night.

They're like, things aren't looking good. We talked to a bunch of CEOs in the space. They're saying, this is not a problem.

And I'm like, I'm like, all due respect. Um, can I put you in touch [00:19:00] with any of the 100 engineers on my sheet? They're like, what's that? And I was like, These are all the folks that I've interviewed.

Like these are the folks that are dealing with it. I was like, whoever you want, just tell me who you want to talk to. And so I put them in touch. They, they did calls on Sunday and Monday, call me back. They're like, not a problem. Um, how about we do a much bigger round? How about, how about we do, um, a 5 million dollar round

and we'll cut three and a half, Robin Bassin at, um, at Mango.

who's also been there from the very beginning. he, um, he wrote a big check. Tim wrote a check. Um, we got a great set of investors that came together really quickly catalyzed by Enrique and Rak. Over at Bain who said, Hey, we're not going to listen to the CEOs. We're going to listen to like the troops on the ground that are dealing with this problem, um, firsthand and having done all of that shoe leather work back in April was absolutely critical to sealing the deal on the seed [00:20:00] round.

It was no longer a pre-seed It was like a seed slash pre seed. We, we went from 0 to 5 In the bank off of a slide deck, right? And some great references.

Jason Yeh (2): Okay. Uh, I I definitely want to double click on this. This is super fun. So you're talking 2020 to 2022. It's right around the time actually, we went from the hottest venture capital market to one of the worst that has extended all the way into now ish, especially, you know, especially through 23. We were still pumping then, right?

It sounds like you were still in

Brian Raymond: Oh, it was apocalyptic. It

was

Jason Yeh (2): It was

Brian Raymond: horrible, The bottom had fallen out. Nobody cared about equity at that point. Nobody, everyone, nobody believed in upside. Finding folks to come in early was, was bad. And then just dollars weren't flowing. And so it was apocalyptic.

Jason Yeh (2): Okay, that's what my first guess was. But the way that the bank, the bank capital [00:21:00] ventures team was, was behaving felt a little bit more like 21, early 22. Um, I want to rewind a little bit because. There's something that you referenced, which is really important to hear, which is the power of awareness and network, right?

Like how these things all sort of flow through. If I look at your, uh, if I look at your LinkedIn profile, it doesn't seem like you have this really deep background that would give you longstanding, you know, decade long relationships into these sort of tech and venture capital scenes. I'll read a couple of the big hitting highlights here. CIA agent for like five years, which is amazing. Uh, national, national security council, director for Iraq at the white house. Also amazing. You did do investment banking, but I think a lot of people would be surprised to note how far away investment banking is actually from venture capital. And so you've had this three years at a, at a, I guess a pretty hot startup.

Tell me a little bit [00:22:00] about your network within Technology and venture capital, like, like, how is that being built and how did it become powerful enough? Do you think, like, if you had to do the calculus to trigger something like this?

Brian Raymond: Yeah, it wasn't great living in Sacramento area. Didn't help. Um, the timing was bad. And. You know, I'd spent those several years at Primer, but like, I wasn't like tight with like investors by any means or anything like that. And the investors that were there that I talked to weren't really interested in chasing this opportunity.

Right. And so, um, the Dartmouth network is okay, but it's not like a Stanford network right in the area. And so, um, really it was like. It was all about making friends, being able to communicate yourself, communicate the vision and proving founder market fit. I had some cred right from Primer, but not a ton.

Um, cause I was like, not the face of the company for the most part. I was like, you know, an [00:23:00] exec who was driving a lot of this stuff. And so,

um,

Jason Yeh (2): Wait, wait,

so

you're telling me essentially, I'm sorry to butt in, but you're telling me essentially that. When you decided that you needed a raise is kind of when you just started meeting these people.

Brian Raymond: a hundred percent, a hundred percent.

You see, not everyone who's successfully raised had a huge network beforehand. All it takes is one lead domino to start knocking down investors for your fundraise. When we come back, Brian shares who that lead domino was for him.

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[00:24:00]

Jason Yeh (2): is

amazing because you know, people need to understand what is possible and what it takes.

I, I often talk a little bit about my journey to raising capital for my last venture backed company. And I had 10 years of building network and relationships in [00:25:00] order to like get to this point, which people, when I try to give them advice around how to like Quickly build network. They're like, it's so easy for you to say that, you know, you had been at large tech companies, you had the MBA, you were at a venture capital firm, you were doing all these things, but you did it.

You kind of did it from the start. So I don't want to like just go so deep on this forever, but

can you say a few words on what it is? Okay,

Brian Raymond: Reed. He's my, my big Kiwi head of business operations. I had recruited, like he worked with me at Primer and then he left Primer to go work for somewhere else. I had no idea even how to start, even where to start, even what to do with for health insurance or anything.

And so I called him and he's like, Hey, I actually like, I had a neighbor who got into YC and I know a guy who is in BC and maybe he'll take a call from you. That guy ended up being Robin Bassin of Mango, which put in [00:26:00] over a million into our seed, right? The other guy Which just made friends and helped coach me on my YC app.

And like, just that, I just replicated that with like, all the people that are close to me. Who do you know? Or, who do you know who knows someone else that might be able to put me in touch? Or, like, I remember like, Pear VC was doing an incubator. I just like, applied to like, every single one of them, right?

And I just did like, Saturation. And I did as like, again, you know, 12 hours a day, just saturation. I doc's end. I had, everyone was firing my docs and out to, and just seeing what would hit.

Jason Yeh (2): so here are the things that I would pull out for everyone here. Um, first of all, like you just, you did some stuff, but, but 12 hours a day is kind of one of the big takeaways. It like, if you start from, from scratch or, you know, it wasn't scratch, but if you start from not what I had, it's going to take work, right?

It's going to take effort in order to get to where you need to get to. Uh, and then there was, there was one line that you [00:27:00] threw out there that. It's sort of layered on top of all of this is what you said is like, you know, being able to articulate your vision and having great fit around it in a compelling way is. instrumental in actually getting these people to be interested. And then I think probably, and I'm just going to guess it's maybe off of vibes. We don't know each other. Um, but while you didn't have my background, 10 years of technology companies, investing, et cetera, you had a lifetime or a career of like, Making people like you, you know, uh, probably doing right by people and, you know, maybe you hadn't ever had to cash in chips and ask like for favors, but there is this importance of like, of being a good person and like, you know, uh, helping people along the way throughout your journey.

Cause I, at a point when you need to call in favors and see if people support you, it's not going to help if you're a huge asshole to the people that [00:28:00] reported you to you at, at, at Primer. And it sounds like it was the opposite. So when you were able to start reaching out to your network and say like, I'm doing this and I have this great vision and it's a great fit for me, people. We're like, I want to help you. I really want to help

Brian Raymond: Oh my gosh. It was, I couldn't have done it without that. I couldn't have done it without that. Like Ben, you're. It's Anna Connelly at OctoAI, um, uh, James Reed, who's now working with us. There's a long list of these folks, there's engineers, all those engineers that I worked with that are now over at Meta or over at X or wherever that were willing to take calls and invest time with me and go to bat for me, um, that, like, it just, it doesn't happen without that.

Jason Yeh (2): He's super cool, man. Okay. So, uh, I'm glad we could spend time on that topic. Super informative instructional for people to hear. Uh, but there's some other interesting parts of the story.

We're talking about a 5 million ish dollar raise in, um, in the midway point of [00:29:00] 2022. Um, but a lot of stuff happened in, in a year's time and now two years time. And it's actually hard to kind of. Piece together based on crunch base and announcement dates. So, you know, at a high level, I wonder if you could talk to me a bit about the Series A. Um, and then, you know, I think maybe we'll zoom in a little bit on the Series B, but Series A, it's, it's probably only a year after, um, what's happening in the company and why

are you like, I'm going to go raise?

Brian Raymond: 10 months. It was 10 months later when I signed the term sheet. And, um, look, I had, I made a bet early on, with unstructured and I was like, look, we're not going to build anything in the first year. That's defensible, except for resolution on what the market wants. And the fastest way to achieve that is by building open source.

And so we started building out in the open. We had this thesis early on of building for the Hugging Face community. Let's make [00:30:00] it easy for the users of Hugging Face. world's largest library of machine learning models to get the data through those models. And, um, and we test, we, we tried a certain approach the first, first few months, zero contributors, zero interest.

We, we evolved that. I don't want to say pivoted because we didn't change what we're doing. We evolved the, the packaging of it where we're like, we're going to be less reliant on contributions and we're just going to make it simple for folks. Flipped it inside out into a single open source API. That was around the time that models started getting a lot better.

You had chatGBT, you had Bloom, you had other larger parameter models emerge. RAG happened. I got to know just by making friends, Harrison Chase at LangChain and Jerry Liu over at Lomindex that previous fall, that world started accelerating. And so open source adopt that to get the data, do the models. Was, you know, there's huge demand spike for that.

And we had almost no friction between engineers and [00:31:00] technology because it was open source. And so we're able to demonstrate PMF pretty rapidly. GitHub stars, sort of, but then like PyPy downloads and things like that. Nice thing about that is you don't have to advertise that.

Every VC is scraping. Like, you know, PyPy downloads, GitHub stars and house trackers, like every sophisticated VC to see like who's taking off, right.

And, um,

Jason Yeh (2): Zero revenue though, right? Minimist.

Brian Raymond: revenue. Well, we had a little bit, we had a little bit from some gov contracts, but it was like, It wasn't licensed, it wasn't licensed, it wasn't, it wasn't revenue that would increase a multiple evaluation, multiple at all. Right. So it's like, it's not real. It was, um, it was this and Robin Bassin, neighbors with Karan Mahendru at Madrona.

They're, they're chatting about this. Pollack Goel, one of the junior guys at Madrona, it's actually roommates with Harrison Chase's brother. They told him about it. And then he started looking through our code base because he was an NLP guy at Microsoft. And [00:32:00] then he told Karan. These guys have something interesting here.

And, um, they asked for a meeting. I didn't know nothing. I knew nothing about Madrona. I had no intention to raise. We have lots of money in the bank. I had just been focused we had a year and a half, two years more capital at the current burn, but like we did launch and it was much of them pitching us as we pitched them.

And they're like, let's, let's try and make something happen. And I was like, I don't want to time fundraising I like you, Karan. I like you Pollack. And I would love. Um, to be able to build more rapidly given the, um, the traction that we're having and, um, I signed a term sheet like two weeks later with, with them.

Jason Yeh (2): So this is pretty amazing because like everything you're talking about is actually all happening during, again, like some of the hardest fundraising markets ever. Um, obviously I haven't been around that long, but I've been around 10, 15 years to see this, um, in the venture and technology space. Um, So that's impressive.

[00:33:00] Although, you know, you are actually part of the groundswell around AI, right? So they're, Mark is really bad, but AI based projects are doing a little bit better.

Now, we're going to fast forward because just A month ago, you all announced a Series B, which would have been, again, just another less than year before, um, you know, after the last round. And so, you already said you had zero or de minimis revenue, you know, as you raised your Series A. By the way, like Series A's right now, Mark's and I'm, I'm seeing are like minimum 3 million of ARR, right? And then the harder markets even to raise at sometimes are these later stage where the numbers have to make sense.

So can we do the same thing and tell me, um, what's, so again, I imagine it's not, you were thinking of raising capital. I'm imagining you didn't [00:34:00] blow through all your capital. So tell us a little bit about what's going on at unstructured and how this even started coming about.

Brian Raymond: I think throughout like fall of 22 and then all 23, still today, we weren't, we were really, really focused on the user on like, having high confidence that we have product market fit and we're building things of value for the user. And there's a bunch of different proxies for that. ARR is one of them.

There's a variety of other usage metrics as well. Um, it was almost like a repeat of, of the Madrona round. Tim Tolley, who was CTO at Swank, he went through our code base, our open source code base, which we froze at the end of summer of 23 and he's on the board of Pinecone and he's an investor in Anthropic and he's like, This is it.

This is, this is the answer. And like, it's born out in the numbers that we're seeing here. We also were getting really good telemetry data [00:35:00] using, um, a tool called Scarf, um, on our open source. And so like through that, we weren't advertising it to, I wasn't even meeting with VCs, but like, you know, at the time, I don't even know the number.

I think it was like, but today it's like 60, 000 companies are now using us every day. And. Our open source and like a third of the fortune 500 are regular users. And, um, we booked a lot of revenue last year, all in the government space, all the national security space, basically non dilutive funding for engineering roadmap that are like stepping stone to license revenue.

But like part of the game here is like, ARR is not the only. If you can get distribution and you can get a moat for a technology moat, right. Then you can cross the chasm to like monetization. Um, but if you can like become. The default that everything's built on, right. That, that, that's valuable as well, because it gives you a lot of leverage down the road.

And so like for us, we were just kind of playing [00:36:00] a slightly different game where it wasn't butts in seat, like seat licenses or anything like that. What we want to do is like this whole, this new architecture that's emerging, everything is built on us and be able to demonstrate that. And that played really well with, you know, VCs that were interested in this stuff.

And so that's, that, that's really what kind of like underwrote like the B, like we had revenue, like we had good, good revenue, but it wasn't licensed. It wasn't like,

Jason Yeh (2): So all of this was preempt, this was preempted then, is what you're saying. Um, I know, was it, was it bank capital ventures that triggered this, uh, that did the initial reach out or was it like one firm reached out and as that was going in, you had to go, well, I'll tell everyone else that this is happening and they have to, You know, they should compete.

Brian Raymond: yeah, like look, Tim, like Tim came up to Sacramento and last December took me to a Kings game. So I love my Kings, my Sacramento Kings.

Came with a, came with a reverse pitch deck. On like, here's what we [00:37:00] see, the vision for the company. Here's, I already went through the entire code base. Here's what I found.

And, um, and I was like, this is, he's the, like, this is the right partner for us. And then we're like, how can we piece together a really interesting round here and made calls to Nvidia and Databricks and IBM and others who we thought would be strategic, um, for like our goals on our next kind of phase of growth.

And, um, we were fortunate enough that they were. They had the confidence to partner with us and to join the round

Jason Yeh (2): So you're, you're saying Tim Tully from Menlo was the one that really like pushed this forward,

Brian Raymond: for the B for the B. Yeah. It was all Tim. Yeah. Tim and Terry.

Jason Yeh (2): really impressive to hear about that. And also again, like just not a great fundraising environment. Um, not a

Brian Raymond: we had no intention. I had no intention. I was thinking two years right before I even think about it. And I was like, I had ARR targets. I had, you know, but, um, but it's also [00:38:00] the flip side of this is that It is intensely competitive. There's a lot of capital chasing knowledge. And if you're a founder and you're focused really on fundamentals and you're, and you're actually making progress on those fundamentals.

you know, they're hungry for tools too, you know? And so, um, and if, but again, like, I don't want to chalk it all up to us. Like we couldn't have predicted like LLMs blowing up and, and that we were, you know, our, our thesis on the tech was going to work out, right. Cause it's really, really tough stuff that we're working on.

Jason Yeh: Well, I mean, I think you should give yourselves a little bit more credit, but, um, it is, it is very cool to hear. I think, like, and the takeaways, there's so many takeaways from this conversation that I think are generally applicable and not just for you, but there is this combination that you've referred to a few times of just like, Confidence and competence and execution, but also awareness.

Like early on, just like doing the stuff that would pick, you know, would get [00:39:00] people to be aware of what you're doing was really important. And then the fact that you decided to go open sourced. Open source, there is a, there is a community of investors that are excited about open source and, you know, open source for, for non technical people out there.

Like it is, it's almost like there is like a community. Okay. You know, Instagram feed or LinkedIn feed of content going out there that people can be reading about. And that's really the contributions to, um, you know, GitHub repos, GitHub repositories or just like the open source community talking about the additions that they're making to these things.

And so, um, what, you know, what I'm trying to make an analogous statement is, is like, Look, Unstructured was able to execute, do good things, but do things in a way that a lot of investors were aware of what was happening. We're seeing it happening. Totally. And for people outside of an industry that can leverage this sort of open source community in terms of a [00:40:00] awareness channel, you should be thinking about if you're doing good stuff like this.

How can the right people hear about you? How can the right people, um, like get a glimpse of what's exciting about what you're working on? Um, so I love, I love that we could couch it all there. And what a crazy two and a half years for you. I mean, just, just the most amazing story that I've heard. Um, so really, honestly, like just really appreciated this conversation.

And part of these interviews that we always like ending on, and I always say, like, Yeah, we might not use it, but it's fun to sort of try to pick out something, um, that's less business oriented. You were a CIA agent for five years, I would love to ask you questions, but I assume like, you know, the whole, you probably have to kill me.

But, is there anything from Your time in the CIA that you have applied to your company and more specifically maybe to your fundraise that has helped [00:41:00] you?

Brian Raymond: Yeah. That's a great question. I think, I mean, there's, there's, there's a lot of things here. Um, CIA, like it was, you know, as an analyst at the CIA, um, You know, you go through something called the career analyst program and they send you almost for a year just to teach you how to think, um, and how to, how to be analytical about the stuff that I went to business school and did the stuff too.

But like, just like, um, picking up like fundraising, right, is daunting. It is a, like there are dozens of steps. Um, there's lots of different pathways, but breaking it down into like digestible pieces and then, um, being able to, to map out a plan for that. Um, that. Being able to simplify that, but then also on the, on the communication side, being able to articulate myself, like in the written world or, um, spoken.

So our like core competencies were, can you write, can you brief and can you think, the critical thinking, those were the three things, like all of our, like, uh, you know, promotion panels were all around those three [00:42:00] things. And I think that that's like really instructive. Like, are you, can you effectively communicate founder market fit?

Right. Um, can you put together like a great plan and can you execute along that, along the way? And, um, there are just so many, um, so many, let's call them things that I was involved with, um, during my time there where, um, you know, I just learned sort of a repeatable process that's pretty generalizable that's been immensely, immensely helpful

That's awesome. Yeah. I mean, people don't realize how complicated and how many moving pieces and how many inputs go into fundraising and it. For someone who hasn't been trained in the CIA, it can be difficult, but, I don't think you're saying you need five years in the CIA to fundraise, but it certainly helped.

Brian Raymond: Uh, it helped me at least. It helped me at least. He was playing catch up all these years. So, yeah, for sure.

​

Jason Yeh: That was my conversation with Brian, Raymond, founder, and CEO of unstructured IO, the leading company, connecting enterprise data to [00:43:00] LLMs.

I hope this episode showed you. You don't need to begin with a crazy network or have started three companies in order to make something huge happen. You just have to have a strong drive and passion for what you're doing. And it doesn't hurt to also have a really amazing product. After the break, I'll be talking with my producer page about all of this.

​

[00:44:00]

Jason_Yeh: Hello, Paige.

Paige Randall: Hi Jason, I was hoping we would maybe switch it up this time and I was kind of waiting for you to like, take the reins.

Jason_Yeh: Okay, I'm gonna do it. How are you, by the way? You just moved to Austin, not so recently.

Paige Randall: Yeah, I'm good, I am looking forward to getting a little taste of L. A. soon, um, to visit the team. But besides that, honestly, I'm doing much better than I thought.

Jason_Yeh: I've, I always felt like Austin would be a good fit for you. Good, You did? good,

vibe fit. Other than the weather, you know, it's, it's got a lot of things that I, I expect you to enjoy.

Paige Randall: It's got a lot of young people.

But anyways, I did want to get into this episode. This was just crazy. Like the, the speed at what Brian has experienced in starting this company, literally like maybe a little over two years ago, I had to process that, like [00:45:00] that this is a new company and how far, I guess he's at least came just like with his product and, and building and raising, it's just.

Yeah,

Jason_Yeh: You know, it's, it's, it's. It's one of those things or the things that he's experiencing it's a, it's a version or it's like a representation of what I like to describe for founders where it's like the things get pulled out of you as opposed to like chasing, you know, chasing funding or even like forcing a company, like forcing this idea that you need to start a company.

The best stories happen when everything gets pulled out of you. Like for, for Brian. He was at a dream job. Like he didn't really want to leave a job, but it was like, he had to, it was like getting pulled out of him. And then these fundraising rounds are always just getting pulled out of them. So I love this.

I, that was an amazing conversation.

Paige Randall: and I just really enjoyed his, his sharing his process around how he stream, streamlined this weird transition because he didn't even know if he was going to [00:46:00] be able to start a company. So what he described to us, which I think a lot of founders will appreciate who are in this weird position of like, You know, you have a family, you have kids, you have all of these things you have to take care of.

And then you have this itch to like maybe do something really crazy and risky. And I, so I really enjoyed him like sharing how he streamlined this with, you know, trying to pull together a small pre seed, also applying to YC at the same time of applying to YC, trying to find a technical co founder, also interviewing for jobs.

Like. I was just like, wow, and he did treat it like a full time job, but I think it was helpful to hear how you even go about that process when you think you have something that's a big opportunity, and then making that, making that transition.

Jason_Yeh: Yeah, I mean, I have two minds about it. In some ways, I do want to say, like, anyone can do this, for sure. Anyone can do this. Um, you know, just, what he showed is that, like, if you want to do something, you want to do something hard, you got to put in effort, and you got to, like, Put sticks in the fire, you gotta [00:47:00] try, you gotta move in the right direction.

And that, and the other side of me wants to also recognize just how special Brian is. I think he's, he's got a, he's got a bit of an aw shucks vibe to him. Like, you know, it's not me. But after speaking to him for an hour, you're like, nah, this guy's got Something special, right? And, um, anyone can do it, but certainly the fact that he would push so hard and, you know, try all these things all at once while having a family, um, not easy to do.

Paige Randall: He said it, he said it so nonchalantly, too. He's just like, yeah, I'm just streamlining.

Jason_Yeh: Yeah, and then I did this, and then I did that, and I'm like, yeah, I, I think, like, with most things, when you, when you say it, or when you write the sentence out about what was happening, you're like, oh yeah, pretty easy, you know, it's like, that only took ten words to describe, but. Actually doing it is much more impressive.

Paige Randall: And I also love the, like, this is something you talk about in your content a little bit is this idea of like being a [00:48:00] non technical co founder and how everyone thinks that you can't really start anything until you find a technical co founder. And I loved how he shared that he just started hitting up a bunch of engineers and just getting data, like just interviewing people, seeing if this was a problem that, uh, they needed solving or whatever. And he then throughout his rounds or throughout his book. Uh, pre seed, seed especially, he was able to like use that data in those interviews to cra like literally close the round.

Jason_Yeh: Yeah. I mean, this is a case study, case study in what people should do if they don't have a technical co founder, need a technical co founder. In fact, you know, that's, that's a question I get or a topic that people want me to discuss with them over and over again, and then after this episode. I'm just going to point them, uh, to this, have them listen to what Brian did and it's, it's true.

It's just like textbook. You, you, you go with, you go out there and you do everything you can [00:49:00] that isn't writing code. And even today, I'll just say like with no code and what you can do, you can do so much more. Um, Brian showed what was possible. And so don't give me any excuses about can't make any progress without a technical co founder.

Paige Randall: Yeah, and on top of that, like, again, I'm just super impressed by this episode. On top of that, he didn't really have a network in the founder VC space. Like he had, you know, he had worked at big, bigger startup companies. He had done a bunch of different things. He knew people, but not directly in the venture founder space. Um, and it was cool to hear him talk about, he was sharing how, I don't know. So is Elite Domino always an investor or can it be someone in a network, in your network?

Jason_Yeh: Good point. Look, um, and just to clarify what you're referencing, this idea of lead domino, it's a, it's a term I use to say like the thing that starts pushing momentum forward as in the first domino that knocks them all down. Usually that is an investor, right? Cause somebody needs [00:50:00] to show a commitment to you

going out on a limb to say you're, you're credible.

Someone else could represent, I think, lead domino, um, in a, in a way, like possibly if you get someone who is Extremely credible, but for whatever reason can't invest.

If they go out and say, I support page and like page is amazing. And then go to, goes to talk to the first investor who would invest

Paige Randall: Well, that's kind of what like, so, he used to work with someone called James Reed at Primer, which actually now works for him at, at Unstructured now. But James Reed introduced him to Robin Bassin at Mango, who ended up putting 1 million into his seed round. And like Robin Bassin was the one who like kind of gathered the troops and got the momentum going.

So I was wondering, who was the lead domino there? Was it James? Like, it seems like it would be James, but I just thought that was him. Insane too, like one connection just happens to know someone [00:51:00] at a venture firm that happens to be really interested, that happens to be able to wrap up the round, like.

Jason_Yeh: That's totally right. One other thing I'll call out too is like, we use these words especially in the podcast and we describe Brian, it's like, look, you can come from zero network and actually get this done. Look what Brian did. I'm sure the haters out there are like, he came from a big company. He actually was in tech. He had network. Like, that's not, you know, that's unfair. He actually had advantages. And what I think is important to say is that maybe he had one step, you know, maybe he was one step in, but he certainly didn't know all the investors.

He certainly didn't know all the players in there. He came from a much different industry before all of this, right? So yes, maybe he had One step in the right direction. But he showed you what happens when you take a small seed of a network and then put a lot of effort into it. Anyone can start from anywhere and [00:52:00] they may be one step behind where Brian was, but with a little effort, you get to that small seed.

And then with a little bit more effort, that becomes a bigger network. I do believe anyone can do it. You just need to put in the effort the way Brian did.

Paige Randall: yeah, he said like he said in the episode He's like I noticed how I was able to build that connection through that and then I replicate it with people close to me So in some of them might have not known anyone some of them might have known someone that would then lead to like it's just You never know where the network is gonna go to but you do have to like it's a A lot of work at first, right?

Like I've, we've seen a bunch of founders go through the process and it is, it's a lot of work, but it can lead to crazy outcomes. Speaking of crazy outcomes, I also just wanted to touch on the fact that like, so we've heard from founders in the past and everyone has a different perspective of like whether or not it's good or bad to have a bunch of capital come in at once. What's funny about Brian's situation though is he wasn't pushing for more capital. [00:53:00] People were pushing him. So like for a Series A and his Series B, it was actually kind of like reverse. So investors were coming at him, trying to get him to close the Series A and the Series B. And my thought process when I was like listening in is just like, Is there, like, do you have a hypothesis around why it would work for a company like unstructured in the link, like language model space?

is it just because it's so competitive and things are growing so fast and it takes so much money? I, I just, it's a lot of money in two years.

Jason_Yeh: Yeah, well, look, I mean, I think a lot goes into this. The first thing I'll say is, uh, the most enticing words that a venture capitalist can hear is no, right? Like when you tell a VC no or that you don't want it, then they're like, Oh my God, this is something that I really want overall. And look with what was happening with Brian and Unstructured [00:54:00] has to do with a lot of.

A confluence of factors hitting all at once. One was like the explosion of the AI wave, um, people understanding how big this could be. And I think once a set of investors start seeing a bit of conviction around a direction of a space, a direction of a company, if they think they see a winner, If they think there's been enough there to show like this could capture a massive part of the market, then they want to put as much money into that company as possible, right?

And so if you see those indications early on, as an investor, your job is to put money to work. And if you think you can put money to work in a, in a de risked opportunity in your minds, then you're going to do everything you can to convince them to take more money. It's why a lot of companies get Overfunded, right?

That's, that's one of the risks is that a VC sees that it's a good [00:55:00] company, that it could use that, you know, that it could be successful. And now they're like, well, instead of putting my money in different places, I actually went like pile more money into this company. So there are risks associated with that, but it happens, you know, when a company seems to be hitting its marks, has a great leader like Brian and checks all the boxes around what a VC wants to see in a big bet.

Paige Randall: Yeah. So it's kind of just like, they're taking, they're betting that Unstructured can capture like large, large part of the market and they want to give him all the resources to do that.

Jason_Yeh: That's right. It

Paige Randall: It's kind of crazy.

Jason_Yeh: is crazy. I think he's got a good head on his shoulders around like how to spend that money not to Not to increase burn just because he has the additional capital. I think, um, yeah, I'm excited to see where they go.

Paige Randall: Totally. Yeah, I was mentioning because I was thinking of our episode with Ian Swanson, uh, with Protect AI, and he was kind of talking about, things he learned from, like, not taking on too much capital at once and things like that, [00:56:00] and I kind of saw similarities between the two

of, like, just, like, very level headed, uh,

Jason_Yeh: totally.

Paige Randall: I don't know, it's hard to explain, but it was cool to see, though, a different take on it, of like, Brian kind of starting this, starting his entrepreneurial part of his life within the last two years, and seeing this, like, it's just really crazy.

Jason_Yeh: It's a good point, you know, maybe the last thing I'll say is that's a, it's an accurate comparison and also such a compliment to Brian, you know, that. You see a lot of Ian and Brian. I, now that you say that, I like, I also see that. And given that, you know, Ian's done this three, four times has been very, very successful.

And this is Brian's first rodeo. It's really impressive, really, really impressive. If you can't tell, Brian, we're very impressed.

and that's the debrief.

Paige Randall: that's the debrief.​

[00:57:00] ​

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